The sale of goods act,1930

• The act came into force on 1st of july 1930

• Buyer :means a person who buys or agrees to
buy goods
• Seller : means a person who sells or agrees to
sell goods
• Goods : means every kind of movable property
other than actionable claims and money , and
includes stock and shares , growing crops,
grass, and things attached to
and forming part of land.
• Existing goods : are such goods as are in existence
at the time of contract of sale (sec 6)
• Specific goods means goods identified and agreed
upon at the time a contract of sale is made
• Ascertained goods : which are identified in
accordance with the agreement after the contract
of sale is made
• Unascertained goods :which are not specifically
identified or ascertained at the time of making of
the contract, they are defined by description or
sample.
• Future goods : means goods to be manufactured
or acquired by the seller after making the
contract of sale
• Contingent goods: the acquisition of which by the
seller depends upon an uncertain contingency.
• Delivery means voluntary transfer of possession
from one person to another . It may be actual,
constructive or symbolic.
• Document of title to goods means any document
used in the ordinary course of business as proof
of possession or control of goods
• Types of documents includes bill of lading,
dock-warrant,warehousekeeper’s
certificate,railway receipt, delivery warrant or
order wharfinger’s certificate
• Mercantile agent: an agent having in the
customary course of business as such agent
authority either to sell goods or consign goods
for the purpose of sale or to buy goods or
raise money on the security of the goods.eg.
Auctioneers , factors, brokers.etc
 Sale and agreement to sell (sec 4)
• Sec 4(1) states that a contract of sale of goods
is a contract whereby the seller transfers or
agrees to transfer the property in goods to the
buyer for a price
• A contract of sale may be absolute or
conditional
• Where the transfer of the property in the
goods is to take place at a future time or
subject to some condition, the contract is
called agreement to sell.
 Elements in a contract of sale
• Two parties , the seller and the buyer
• Subject matter of contract is goods
• A price in money should be paid or promised
• Transfer of property in goods from seller to
buyer
• It may be absolute or conditional
• All essentials of a valid contract must be
present.
 CONTRACT OF SALE HOW MADE(S5)
• By an offer to buy or sell goods for a price and
acceptance of such offer
• Immediate delivery of goods
• Immediate payment of price
• Immediate delivery of goods and an immediate payment
of price
• Delivery or payment or both are to be made in
installments
• Delivery or payment or both are to be made at some
future date
 SUBJECT MATTER OF CONTRACT OF SALE(S6)

• goods may be either existing goods,owned or

possessed by the seller or future goods
• Contract for the sale of goods the acquisition
of which depends upon a contingency
• Whereby a contract of sale the seller purports
to effect a present sale of future goods,the
contract operates as an agreement to sell the
goods
• Goods perishing before making of
contract(S.7)
the contract is void

• Goods perishing before sale but after the

agreement to sell(S.8)
The agreement is avoided
 ASCERTAINMENT OF PRICE (S9)
• Price means the monetary consideration for
the sale of goods.The price in the contract of
sale maybe
– Fixed by the contract
– Agreed to be fixed in a manner provided by the
contract eg by a valuer
– Determined by the course of dealings between the
parties
AGREEMENT TO SELL AT VALUATION(S10)

• Where the price is to be fixed by the valuation

of third party and such third party cannot or
does not make such valuation,the agreement
is thereby avoided
• Where such third party is prevented from
making the valuation by the fault of the seller
or buyer,the party not in fault may maintain a
suit for damages against the party in default.
• Stipulation as to time (sec 11): unless a
different intention appears from the terms of
the contract, stipulation as to time of payment
is not deemed to be the essence of the
contract of sale
• But delivery of goods must be made without
delay , such stipulation depends on the terms
agreed upon
 CONDITION AND WARRANTY (S.12)
• A condition is a stipulation essential to the main
purpose of the contract, the breach of which gives
rise to a right to treat the contract as repudiated.
• A warranty is a stipulation collateral to the main
purpose of the contract, the breach of which gives
rise to a claim for damages but not to a right to
reject the goods and treat the contract as
repudiated .
• A breach of condition may be treated as a breach
of warranty but a breach of warranty cannot be
treated as a breach of condition.
 Cases when condition to be treated as
warranty (s. 13)
• Where the buyer altogether waives the
performance of the condition
• Where the buyer elects to treat the breach of
conditions as one of a warranty
• Where the contract is non-severable and the
buyer has accepted whole or part thereof
• Where the fulfillment of any condition or
warranty is excused by law .
 Express and implied conditions and
warranties (s. 14-17)
• Express conditions are those which are agreed
upon between the parties at the time of
contract and are expressly provided for.
• Implied conditions are those which are
presumed by law to be present in the contract
 Implied conditions
1.Condition as to title ( s 14) : in case of sale ,
seller has the right to sell the goods and in
case of agreement to sell, he will have the
right to sell the goods at the time when the
property is to pass
If the seller’s title is defective, buyer must
return the goods to the true owner and
recover the price from the seller.
2. Sale by description( S 15): there is an implied
condition that the goods shall correspond with
the description
3. Sale by sample ( S 17): there is an implied
condition that the bulk shall correspond with
the sample in quality, and the buyer shall have
a reasonable opportunity of comparing the
bulk with the sample, and they shall be free
from any defects rendering them
unmerchantable.
4. Sale by sample as well as by description ( s 15)
bulk must correspond with both.
5. Condition as to quality or fitness { s16 (1)}
6. Condition as to merchantability { s 16(2)}
7.Condition as to wholesomeness
 Implied warranties

• Warranty as to undisturbed possession

• Warranty as to non-existence of
encumbrances
• Warranty as to quality or fitness by usage of
trade
• Disclosure of dangerous nature of goods
 Doctrine of caveat emptor
• It means “ let the buyer beware”. It is the
buyers who must make a proper selection or
choice of goods . If the goods turn out to be
defective , he cannot hold seller liable.
• the rule of caveat emptor is laid down in sec
16 which states that there is no implied
warranty or condition as to the quality or
fitness for any particular purpose of goods
supplied under a contract of sale
 Exceptions to the doctrine of caveat
emptor
1.Where the buyer makes known to the seller
the purpose for which goods are required and
relies on his skills and judgement and the
goods are of a description which is in the
course of seller’s business to supply.
2. Goods purchased under a brand name or
patent
3.Goods sold by description
4. Goods of merchantable quality
5. Sale by sample
6. Goods sold by sample as well as by
description
7.trade usage
8. seller actively conceals a defect or is guilty of
fraud.
 Transfer of ownership and delivery of goods

• Sale of goods involves transfer of ownership of

property from seller to buyer. It involves three
stages:
a. passing of property
b. delivery of goods
c. passing of risks
 Passing of property (sec 18-26)
A. Property in case of specific or ascertained
goods passes when intended to pass (s 19)
The stages of goods while passing of property
a. specific goods in a deliverable state (s 20)
b. specific goods to be put into a deliverable
state ( s21)
c. specific goods in a deliverable state , when
the seller has to do anything thereto in order
to ascertain price ( s 22)
B. Passing of property in case of unascertained
goods is done as follows: (s 23)
a. sale of unascertained goods by description:
when the goods of that description and in a
deliverable state are unconditionally
appropriated to the contract , the property in
the goods passes to the buyer
b. delivery to the carrier: where the seller
delivers the goods to the buyer or to a carrier,
he is deemed to have unconditionally
appropriated the goods to the contract.
C. Goods sent on approval or on sale or return ,
the property passes to the buyer: ( s 24)
a. when he signifies his approval
b. if he does not signify his approval, but
retains the goods without giving notice of
rejection , on the expiry of such fixed time or
any reasonable time
c. he does something to the goods which is
equivalent to accepting the goods , eg. Pledge
D. Reservation of right of disposal (s 25)
where there is a contract for the sale of
specific goods or where the goods are
subsequently appropriated to the contract,
the seller may reserve the right of disposal
until certain conditions are fulfilled eg. Passing
of property on payment of price
 Risk prima facie passes with the property
( 26)
• Goods remain at the seller’s risk until the
property is transferred to the buyer, but when
the property is transferred to the buyer , the
goods are at buyer’s risk whether delivery has
been made or not
• where delivery is delayed through the fault of
either buyer or seller the goods are at the risk
of the party in fault as regards any loss
 Transfer of title ( sec 27-30)
• Where goods are sold by a person who is not
the owner thereof and who does not sell them
under the authority or with the consent of the
owner, the buyer acquires no better title to
the goods than the seller had , unless the
owner of the goods is by his conduct
precluded from denying the seller’s authority
to sell.
 Exceptions
• Sale by a mercantile agent
• Sale by one of the joint owners
• Sale by a person in possession under a
voidable contract
• Sale by one who has already sold the goods
but continues in possession thereof
• Sale by buyer obtaining possession before the
property in the goods has vested in him
• Effect of estoppel
• Sale by an unpaid seller
• Sale under the provisions of other acts like
sale by an official receiver or liquidator of the
company ,purchase of goods from the finder
of lost goods , sale by a pawnee
 Performance of contract of sale
• Delivery means voluntary transfer of
possession from one person to another
• Duties of the seller to deliver the goods and of
the buyer to accept and pay for them. (s 31)
• Payment and delivery are concurrent
conditions ( s. 32)
 Rules regarding delivery of goods

• delivery of goods ( s 33): means putting the

goods in the possession of the buyer
• Effect of part delivery (s 34)
• Buyer to apply for delivery (s 35)
• Place, time, of delivery ( s 36)
• Goods in possession of a third party
• Time for tender of delivery
• Expenses for delivery
• Delivery of wrong quantity (s 37)
• Instalment deliveries (s 38)
• Delivery to carrier (s 39)
• Deterioration during transit (s 40)
• Buyer’s right to examine the goods (s 41)
• rules related to acceptance of delivery of
goods ( s 42): when the buyer intimates to the
seller that he had accepted the goods , or
retain the goods after the expiry of a
reasonable time
 Unpaid seller
• Sec 45 states that the seller of goods is
deemed to be an unpaid seller when –
a. the whole of the price has not been paid or
tendered and the seller has an immediate
right of action for the price.
b .When a bill of exchange or other negotiable
instrument has been received as conditional
payment, and the condition has not been
fulfilled due to dishonour or otherwise.
 Rights of an unpaid seller
• Rights of an unpaid seller is of two types:
A. Rights against the goods :
a. when property in goods has passed to the
buyer
b. when property in goods has not passed to
the buyer
B. Rights against the buyer
Rights of an unpaid seller against the goods

1. Seller’s lien : sec 47 states that an unpaid

seller of goods who is in possession of them is
entitled to retain possession until payment or
tender of price in the following cases:
a. where goods have been sold without any
stipulation as to credit
b. where goods have been sold on credit, but
the term of credit has expired
c. where buyer becomes insolvent
 Termination of lien (s 49)
• When he delivers the goods to a carrier or
bailee for the purpose of transmission to buyer
without reserving the right of disposal of
goods.
• Where the buyer or his agent lawfully obtains
possession of goods
• Where the seller has waived the right of lien
• By estoppel i.e. Where the seller so conducts
himself that he leads third parties to believe
that the lien does not exist.
 2. Right of stoppage in transit (s 50)
• This means the right of stopping the goods
while they are in transit, to regain the
possession and to retain them till the full price
is paid. The following conditions must be
fulfilled:
a. the seller must be unpaid
b. he must have parted with the possession of
goods
c. the goods are in transit
d. the buyer has become insolvent
 When the transit comes to an end
• The right of stoppage in transit is lost when
transit comes to an end: ( s 51)
a. when the buyer or other bailee obtains
delivery
b. buyer obtains delivery before the arrival of
goods at the destination
c. where after the arrival of the goods at the
appointed destination, the carrier or bailee
acknowledges to the buyer or his agent that he
holds the goods on his behalf
• If the carrier wrongfully refuses to deliver the
goods to the buyer
• Where goods are delivered to the carrier hired
by the buyer
• where part delivery of goods has been made
to the buyer transit will end for the remaining
goods which are yet in the course of
transmission
•
How stoppage in transit is effected: ( sec 52)
a. by taking actual possession of goods
b. by giving notice of his claim to the carrier or other
bailee in whose possession the goods are , not to
deliver such goods. When such notice is given, he
shall redeliver the goods to, or according to the
directions of the seller. The expenses of re-delivery
shall be borne by the seller.
 3. Right of re-sale ( sec 54)
• This right can be exercised under the following
conditions:
a. where the goods are of perishable nature
b. where he gives notice to the buyer of his intention
to resell the goods
c. where an unpaid seller who has exercised lien or
stoppage, resells the goods , the subsequent buyer
acquires a good title.
d. where a right of resale is expressly reserved in a
contract of sale , the seller may resell the goods on
buyer’s default.
e. where the property in goods has not passed
on to the buyer, the unpaid seller has in
addition to his remedies , a right of
withholding the delivery of the goods .
Rights of an unpaid seller against the buyer

• Suit for price ( s 55)

• Suit for damages for non- acceptance (s 56)
• Repudiation of contract before due date (s 60)
• Suit for interest ( s 61)
 Breach of contract by seller
• Where he fails to deliver the goods at the time
or in the manner prescribed
• Repudiates the contract
• Deliver non-conforming goods and the buyer
rejects and revokes acceptance
 Rights of the buyer
• Damages for non -delivery
• Suit for specific performance
• Suit for breach of warranty
• Suit for anticipatory breach
• Suit for interest